CFG Planner Blog

Category: CFG Planner Blog

This year has gone by fast, take advantage of these three moves before the year is over.

Bunch your deductions.
Many of us are receiving our property tax bills now. Look at your projected income for next year, if you are expecting a raise or bonus, you may want to delay paying your 2017 property tax until January, then also pay your 2018 property tax next year. By bunching these two tax bills in one year, you will have a bigger deduction.

Do you remember the 1993 movie “Grumpy old men?” It was about a couple of retired guys that spent most of their retirement bickering with each other and fishing. You would think that a story about lifelong friends spending their retirement years on the water would be nice, but they were grumpy because the only thing they had to do was fish and fight. A successful retirement takes more than money, it takes purpose.

Most pre-retirees as concerned about not having a regular schedule and things to do vs. having enough money. Many retirees worry that they will not be able to fill their days or feel that they still have a purpose in life. A big part of retirement planning is what you will do in the 25 or more years you still have to live + making sure that you have planned financially.
If you plan diligently for your retirement dollars and time, it will be a retirement that is enjoyable.

Inherited IRA’s, also known as stretch IRAs, are specifically designed for retirement plan non-spouse beneficiaries – those who have inherited an IRA or workplace retirement plan such as a 401k (although one would be appropriate for a spouse who is under the age of 59-1/2 and needs access to funds). If they are not set up and funded correctly, there could be irreversible and costly consequences.

We are living longer due to healthcare innovations, which is the good news. However, the bad news is that at least 70% of people over the age of 65 will require long-term care services at some point. People are often confused that Medicare and private health insurance programs pay for these services, but they don’t. Long-term care costs thousands of dollars per month with the average stay being three years.

I get more calls from my female clients vs. their male counterparts telling me that there is a family emergency and they need to pull funds from their retirement account to help. It pains me to liquidate the funds but I know they have no place else to turn. These withdrawals add to the double whammy of most women earning less, therefore, they save less than their male counterparts.
We are conditioned to be the caregivers. It makes sense that when a loved one is in trouble, we throw on our capes and rush to help them. We need to start turning the cape around and be a little selfish once in a while or we will be no good to anyone.

I recently recalled a conversation I had with a young client about 20 years ago. The client said to me, “If I only had XX $$’s in income, everything would be perfect.” My client felt that if they made “a lot” of income, and then could have a pile of money, everything would be fine. My client was missing the point. The income is not the issue.

First, don’t treat retirement as the destination! It’s actually the beginning of the next part of life. It’s easy for people who are still working to think of retirement as an end goal, but it is a mistake if you only concentrate on reaching the finish line with no fuel to keep going afterward. Keep in mind that your retirement could last longer than your working career, so you will need to have your assets last. I have had clients say to me: “I plan to retire in a year or two so I think I need to invest much more conservatively.” Portfolios may need to be tweaked, but it’s certainly not time to put on the brakes!

One common mistake occurs when an IRA owner fails to name a beneficiary. Unlike other property, IRA’s do not pass by will. They pass according to the IRA’s beneficiary designation form. If there is no named beneficiary, the default beneficiary will generally be the owner’s estate and subject to probate. Plus your beneficiary won’t be able to stretch distributions over their lifetime. Make sure your beneficiary information is accurate… and avoid making distributions to unintended beneficiaries, like your ex-spouse.

Let me first admit I have been guilty in the past of providing clients with 5 plus page reports purporting to solve one of the “biggest retirement dilemmas”, when to start claiming Social Security (SS) benefits. I found the report confusing myself so I sought to make this decision easier for my clients. I found the decision is as easy as M A T H.

Last week I received a call from a client asking that I flag his accounts. He thinks someone is trying to scam him and get his funds.
He received a phone call from someone with a foreign accent stating that his grandson was in an accident while on vacation. He asked where his grandson was and could he talk to him. A weak sounding boy got on the phone and said “Hi grandpa, I need your help, I was in an accident and need money to pay the ambulance and for hospital bills.” My client asked “Which grandson is this?’ He expected to hear a name, instead the boy said “Your oldest grandson.” I actually thought that was a clever answer. My client quickly hung up and started making calls to all of his financial institutions to protect his accounts.

With school ending and summer vacations starting, I am sure we will hear of this type of scam more often. Please keep your guard up and do not give out any information to anyone you do not know.